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Cross says UK small companies managers are rightly chasing growth opportunities in resources and mining as the sector is experiencing high valuations but he feels that small-cap investors are not always aware of the big holdings in individual sectors taken by managers and says overweighting could lead to huge problems. The Framlington UK sma-ller companies fund managed by Roger Whiteoak holds 17.8 per cent in resources. The fund is up by 42.3 per cent over a year against a sector average of 13.2 per cent and invests heavily in petroleum, oils and mining stocks. The Artemis UK smaller companies fund has 20.5 per cent in oil and gas and 7 per cent in mining. Liontrust marketing director Jonathan Harbottle says: “Resources are extremely overvalued. It is all very well getting in to these small resource stocks but getting out could be a completely different matter if things start to go wrong. “In the technology crash, there was no one large catalyst, just a series of falls that led to investors losing a lot of money. All the signs are here of a similar bubble growing.” Hargreaves Lansdown inv-estment manager Ben Yearsley says: “I think there is a lot of froth in resources, particularly in the smaller companies sector, where a company says it might be about to find oil or gas, for example. It looks like a bubble but if you talk to the sector specialists such as First State and JPMF, they seem fairly relaxed, saying the fundamentals are all still there.” Artemis communications director Nick Wells says: “This is what managers normally say when they not in a sector. The huge global demand for resources does not suggest to us that there is a bubble growing. “There are always problems getting out of smallcap firms – which makes it more important to be well on top of the sector.” Framlington declined to comment.